Transcript BUSINESS DEVELOPMENT SUPPORT REPORT

BUSINESS DEVELOPMENT
SUPPORT REPORT
MAY 2002
Business Development Support Report
Contents
1. Executive summary
2. Introduction
3. International best practice
4. Current BDS in South Africa
5. Strategic options for BDS for microfinanciers
6. Next steps
2
Executive Summary
BDS initiatives must be driven by the needs of the community, and must be
easily accessible by the target audience
Best practice guiding principles for successful BDS initiatives
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BDS services must be demand-driven
The SMME community must have a strong sense of ownership in the BDS
The BDS initiative must achieve maximum outreach
The BDS initiative must be financially sustainable
BDS services must be provided to the right clientele
There are currently many BDS initiatives in South Africa


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Numerous delivery mechanisms are used e.g. internet, face-to-face, call centre
Information is provided at various levels of detail e.g. general, industry-specific
Support is provided at various levels e.g. information, advice, training, shared services
Revenue models range from donor-funded (free services) to self-sustained (charge for services)
Best practice model for BDS delivery
 Central hub / resource centre coordinating all relevant information / support advice
 Call centre / internet access of resource centre
 Nationally distributed field of service providers for face-to-face support
3
Contents
1. Executive summary
2. Introduction
3. International best practice
4. Current BDS in South Africa
5. Strategic Options for BDS for microfinanciers
6. Next steps
4
Focus of BDS Assignment
The business development support (BDS) section researches the most
appropriate opportunities for delivering BDS to microfinanciers in South Africa
REPORT
DEFINITION
Consultation
report
 BDS ideas in the South African
context
APPROACH
 Consult with sample of stakeholders around learner support mechanis
 Include stakholders who are:
 Donor-funded vs. private businesses
 Operating in isolated centres vs. those who have national reach
 Micro finance specific vs. general business
BDS review
report
 An assessment of certain current
BDS initiatives in South Africa
 Interview sample of stakeholders providing BDS in South Africa
 Assess BDS content and delivery mechanisms
 Assess relevance to micro financiers
Best practice
BDS report
 Report detailing best practices,
guiding principles and lessons
learnt as identified from existing
BDS initiatives worldwide
 Review and assess worldwide BDS case studies
Include studies from range of countries (mostly ‘3rd world’
countries)
 Research worldwide BDS best practice and guiding principles
Include BDS success factors, as well as barriers to success
BDS strategy
 Recommendation for a strategy
to establish a BDS initiative
aimed at micro financiers in
South Africa
 Consider global best practices and lessons learnt
 Utlise current South African initiatives were applicable
 Identify key decisions to be made regarding recommendation
 Identify next steps required to pursue recommendation
The consultation and BDS review reports are combined in this presentation
5
Definitions
Within the context of this research, the following definitions were used:

Small Medium and Micro Enterprises (SMME)
 Businesses with a staff compliment of less than 50

Microfinancier
 An organisation (private, public or Section 21) which provides loans
SMMEs or individuals under the exemption notice to the Usury Act

BDS
 The provision of any non-financial service – including information,
knowledge, skills and advice - to a business
6
What is BDS?
BDS refers to the provision of information, knowledge, skills, and advice on the
various aspects of a business.
PROVIDERS
Family
Friends
Customers
Accounting /
Business
auditing
Networks
Accountants
SERVICES
Inspection
& testing
Finance
companies
NEEDS
Technical
information Technology
Banks
Personnel
Finance
Laws /
Regulations
Linkages
Courier
delivery
Consultants
Micro
financiers
Accounting
Security
Training
Markets
Production
National
Govt.
Computer
services
Local
Govt.
Parastatals
Business
space
Legal
services
Administration
Consultancy
Repair /
maintenance
Web-site
design &
mgmt.
Clubs
NGOs
Associations
Universities /
Colleges
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• Includes all external non-financial
support to enterprises that
• Increases operational capacity
• Provides access to markets
• Improves management skills
• Improves financial efficiency
• Provides access to networks and
information
• Examples of BDS services include:
• Training / skills development
• Legal services
• Accounting / auditing
• Advertising
• Network brokering
• Business consultancy
• etc.
Ref: Microenterprise Best Practices,
Development Alternatives Inc, 1999
Why is BDS Required?
The provision of financial support and funding to start up SMMEs and
microfinanciers is not enough, and does not ensure their future survival

Development programs generally focus on financial assistance to
entrepreneurs, SMMEs and microfinanciers

After start-up, microfinanciers must acquire a variety of business skills to run
their businesses. However, it is often overwhelming for a business with few
employees to acquire these non-core skills

Microfinanciers require BDS support to develop the skills in-house, or to
outsource to local providers
BDS is advantageous in ensuring the survival, productivity,
competitiveness and growth of microfinanciers
Ref: International Labour Organization, Working paper no. 5, The Hidden MSE Service Sector, G. Anderson, 2000
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Contents
1. Executive summary
2. Introduction
3. International best practice

Summary

What BDS services are offered?

How is BDS offered?
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Who are the players in BDS?
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BDS success criteria

Barriers to BDS success

A best-practice BDS model
4. Current BDS in South Africa
5. Strategic Options for BDS for microfinanciers
6. Next steps
9
Summary: International Best Practice
Best practice for successful BDS
 BDS services must be demand-driven to ensure a greater, more positive impact
 The SMME community must have a strong sense of ownership in the BDS initiative to
ensure commitment
 The BDS center must reach a maximum portion of the target audience
 BDS services must be provided to the right clientele, and who will make good use of the
services
 The BDS center and its service providers must achieve financial stability to be sustainable
over the long term
Barriers to success
 Providing all BDS services for free often results in poor commitment from the users
 Private sector funding alone may not be sufficient, necessitating participation by public
donors
 Support services are often too generalised, thereby resulting in poor use by the target
audience
 Support services are sometimes not accessible by the target users, thereby resulting in poor
use by the target audience
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What BDS Services are Offered?
Best practice research shows that BDS must include market- or sector-specific
information, in addition to generic business advice
Enterprise management
services
 Accounting, tax and secretarial services; Analysis of financial statements; Financial planning
 Legal and regulatory compliance advice; Internal audits; Subcontracting arrangements
 Preparation of business plans
Marketing services
 Identifying and targeting attractive markets
 Marketing of products and services
 Development of local promotional activities
Human resource
development services
 Training of employees
 Recruitment of employees (permanent, temporary and contract staff)
 Policies and procedures
 Payroll services
Technical / production
services
 Technology information, equipment, and advice
 Information on processing techniques and procurement of equipment / materials
 Access to business facilities and infrastructure
 Access to materials, supplies, and equipment
Research and studies
 Sector-specific trends
 Market research
BDS must be relevant to the types of SMMEs it is being offered to: there
must be a balance between general and industry specific support
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How is BDS Offered?
BDS can be offered on a stand-alone basis, or as a bundled offering of related
services and products
Stand-alone support
Bundled support
 BDS can be delivered as part of an
existing business-to-business relationship,
generally as part of another transaction
 e.g. training received as part of the
purchase of equipment
 Caters for training or support which is only
required infrequently
 ‘once-off’
 BDS can also be delivered via business
associations and informal business
networks
 A grouping of providers of related services
 e.g. grouping of providers of
accounting, tax and legal services
 Caters for support which is required on a
ongoing basis
 ‘one stop shop’
The delivery of BDS services must be tailored to the
requirements of the recipients
Ref: International Labour Organization, Business Development Services for
Small Enterprises: Guiding Principles for Donor Intervention, 2001 Edition
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Who are the Players in BDS?
Organisations involved in a BDS network generally come from the private and
public sector
SMMEs
 The actual / potential clients of BDS providers
BDS Providers
 Provide services directly to SMMEs
 Individuals, private firms, NGOs, parastatals, government agencies, industry associations, etc
BDS Facilitators
 Advocate policy for BDS environment
 Support the BDS infrastructure and players
 Support BDS providers, e.g. promoting good practice, building provider capacity
 Educate SMMEs about the potential benefits of BDS services, and may provide incentives to
SMMEs utilising BDS services
 Evaluate quality and impact of BDS providers and their services
 Private firms, NGOs, parastatals, government agencies, industry associations, e.g. International
Labour Organisation
Donors
 Provide funding for BDS projects and programs
Governments
 Provide funding for BDS projects and programs
 Provide an enabling policy, legal and regulatory environment for BDS initiative
 Provide public goods e.g. basic infrastructure, education and information services
The mix of BDS participants will change as the BDS infrastructure and
mechanism becomes more established
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BDS Success Criteria
Best practice research indicates that successful BDS initiatives understand the
markets they serve, and provide demand-driven services
1. BDS services must be demand-driven
 Ensures a greater, more positive impact, and encourages clients to pay for the services they value
2. BDS services must be provided to the right clientele
 The main objective of a BDS is to facilitate growth, profitability and competitiveness of SMMEs. The
BDS must therefore be provided to SMMEs who exhibit good entrepreneurial characteristics and can
make good use of the services
3. The SMME community must have a strong sense of ownership in the BDS
 The best business providers generally work in the environment, resulting in commitment and strong
ownership
4. The BDS center must achieve maximum outreach
 Maximum impact can be achieved by strengthening private sector service providers, creating better
networks between service providers, and promoting informal systems of learning
5. The BDS center and its service providers must achieve financial sustainability
 The institutional and financial sustainability must be achieved by controlling costs to maintain
competitive and to increase profits
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Barriers to BDS Success
Provision of BDS can be complicated, and some international initiatives have
not been successful
 Not charging for services often results in poor commitment from the users
 There must be a balance between free and paid-for services
 Relying solely on private market finance can be detrimental
 Businesses may be reluctant to incur the costs of setting up BDS initiatives, as their competitors may be just
as likely to benefit
 Provides a rationale for donor support justified on a cost-benefit basis, rather than on the return on
investment that individual businesses usually make
 Support services are often too generalised
 Often supply-driven and delivered in a top-down fashion, rather than from a SMME demand perspective
 Training should be business-oriented, and not viewed as an extension of the basic general educational
system
 Support services are sometimes not accessible by the target users
 Must be delivered via a suitable, convenient medium
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A Best Practice BDS Model
This BDS model caters for users who have vastly different technical
capabilities, and who may be widely dispersed geographically
BDS
PROVIDER
SMMEs
(USERS)
SMME 1
Complicated
requests routed to
content specialist
Walk-in /
phone / fax
call center /
email
SMMEs
BDS
Training courses,
seminars, roadshows,
internships
SMMEs
Newsletters, self-study
training, toolkits,
videos, CDs
‘pushes out’
information to
SMMEs
SMMEs
SMME 2
Access
internet portal
Various databases,
library items, question
and answer system etc.
One-on-one’s,
mentoring, coaching
SMMEs
BDS Centre
BDS FACILITATOR
Radio, television
Ref: Scottish Empire, SME Issues, Vol. 1, No. 3, November 2000
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A Best Practice BDS Model, ctd
The BDS centre is usually a public organisation, setting national strategy and
priorities for the initiative and ensuring national delivery
 BDS centre:
 Donor funded
 Liaises with all service providers and government organisations
 Coordinates all material centrally
 Sets national strategy and priority
 Coordinates national delivery
 BDS providers:
 Independent corporations located across the country
 May obtain funding from BDS centre
 Obtain accreditation by the BDS centre, and therefore trusted in the community
 Operates under the national strategy set by the centre, but can adjust ‘menu’ of services
based on local requirements
The model has been successfully deployed in Scotland, where increased
services sales of £820 million is expected over the period 2001 - 2003
Ref: Scottish Empire, SME Issues, Vol. 1, No. 3, November 2000
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BDS Case Studies
Worldwide case studies assessed include:
1.
2.
3.
4.
5.
6.
Scotland: Local enterprise companies (LECs)
CGAP: Microfinance gateway
Papua New Guinea: Microfinance competence center
Paraguay: Training voucher scheme
Kenya: Training programs
Benin: Information services programs
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Overview of BDS Case Studies
Key Findings
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Much emphasis is placed on promoting a culture of entreprenuership
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Support and advice are delivered at as local a level as possible
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Initiatives use private companies, where possible, to provide services,
thereby supporting SMME development
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Initiatives range from hi-tech (internet portals) to very simplistic (selling of
training materials on the street)
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Most initiatives are funded by a combination of public sector and private
sector organisations
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Initiatives promoting mentoring / coaching have seen exceptional benefits in
the community
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Many examples of incentivisation exist which can be used within a greater
framework of BDS delivery. The training voucher scheme established in
Paraguay has been particularly successful
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Case Study 1:
SMME Support in Scotland
The Scottish Enterprise (SE) is a government-supported initiative to strengthen
SMMEs in Scotland


Operates 13 autonomous business centers, Local Enterprise Companies (LECs)
 Constituted as independent corporations
 Work consistently with the national strategy set by the SE
 Have discretion to adjust its ‘menu’ of activities to meet local needs and activities
Assistance provided to SMMEs include:
 Management development: formal training, collaborative visits to examples of best practice
 Staff development: promoting a culture of training, development of key skills
 Product development: new product research and development
 Export support: export plans, market entry, trade missions
 Financial access: preparation of applications
 Advice in the adoption of e-commerce and other new business models
•
•
•
•
Helped create 25,000 new jobs (1999 – 2000)
Added £900 m to Scottish GDP (1999 – 2000)
Enabled 23,277 people to begin training programs (1999 – 2000)
Helped 7,013 new businesses to start up (1999 – 2000)
Ref: SME Issues, Vol. 1, No. 3, November 2000
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Case Study 1:
SMME Support in Scotland
The Scottish network provides tiered information services, depending on the
complexity of the SMME’s requirements
LEVEL 1:
Business Information
LEVEL 2:
New Company Information
 More tailored support for emerging
new startups
 Information re. Business planning,
market potential, recruitment,
property, sales and marketing
 One-to-one sessions, shared
seminars and training sessions
 Delivered by experienced advisors
 Decentralisation of advice to local
agencies (e.g. Chamber of
Commerce, or local authorities)
 “Small Business Gateway”
 The information provided is usually
of a basic level
 Network has town center locations
 Most business is transacted by
telephone and the internet
 Trained information providers deal
with callers (via a toll-free phone
number)
 Users can access a range of
customized and proprietary
databases (via telephone operator,
or on-line)
 More advanced enquiries are
referred on to specialist sources
Increasing complexity of advice required
Ref: SME Issues, Vol. 1, No. 3, November 2000
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LEVEL 3:
Commercialisation
 Target SMMEs showing fast growth
and value added potential
 Highly targeted advice
 Exploit research from universities
and institutes
Case Study 2:
CGAP Online Resource Center
The Consultative Group to Assist the Poorest (CGAP) is a consortium of 29
bilateral and multilateral donor agencies who support microfinance


Target audience: microfinance institutions, donors and the microfinance industry
Develop technical tools and services, deliver training, provide strategic advice and technical
assistance, and action research
• CGAP Secretariat
 Responsible for implementing the group's mandate
 Housed in the World Bank
• The Consultative Group
 responsible for setting CGAP's strategic direction,
making policy decisions, approving its budget, and
reviewing achievements
• Policy Advisory Group
 8 microfinance practitioners and experts
 Plays a strategic and decisive role in guiding and
advising the on CGAP's strategy and agenda
• Investment Committee
 Custodian of a small grant facility in support of its
activities
 Members are from World Bank and International
Finance Corporation
Ref: www.cgap.org
Consultative
Group of Member
Donors
Investment
Committee
CGAP
Secretariat
Microfinance
Institutions
Clients
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Policy Advisory
Group
Case Study 2:
CGAP Online Resource Center
CGAP launched a web-based portal providing a library of microfinance
publications and other information - the Microfinance Gateway


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
“One stop microfinance information hub”
A forum for MFI practitioners, NGOs, Donors, etc. to learn about microfinance topics and to
share their knowledge
Collection of over 12,000 documents and practical tools
Users can consult 1,300 abstracts and download 700 documents directly
Access to 20 thematic pages of selected documents and information contacts and links to
10,000 web pages
Information on microfinance training and conferences, job opportunities, capability for users
to post their CVs
Users can make contributions to the site, and recommend improvements
Users can receive email bulletins for regular updates
On average, the site experiences 375 000 site hits per month, and
6000 unique users per month
Ref: www.cgap.org
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Case Study 2:
CGAP Online Resource Center
Ref: www.cgap.org
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Case Study 3:
Papua New Guinea
A project was initiated in 2000 in Papua New Guinea (PNG) to strengthen the
institutional capacity of existing and new MFIs



MFIs are scattered across PNG, operating in isolation and without clear perspectives.
Knowledge of microfinance best practice is limited
Microfinance initiatives require support measures to ensure sustainable delivery of
microfinance services
One component of the project is to establish a Microfinance Competence Center, providing:
 A network of existing service providers, creating a forum for policy implementation and
development of local capacity
 Training in technical and organization skills
 On-site counseling
 Study tours to successfully operating MFIs in Asia
 In-country conferences and workshops
Programme will strengthen at least 40 new or existing MFIs
Ref: Asian Development Bank, www.adb.org
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Case Study 4:
Training Voucher Scheme in Paraguay
Paraguay runs a successful training voucher scheme which ensures that
microentrepreneurs actually attend the courses designed for them






SMMEs can purchase training vouchers from government offices at a subsidised rate
The vouchers can be used to pay for training programmes at institutions which have been
approved by the government
Institutions can exchange vouchers only after programmes are completed and only if
participants have attended more than 75% of the classes
Registered training institutes receive both the up-front the payment as well as the vouchers
Over 50 percent of program participants were repeat users
Empowered by the purchasing power of vouchers, entrepreneurs are exercising their choice
and there are already signs that institutions are having to become more responsive to their
needs
In the first 20 months of operation, 11,324 micro entrepreneurs participated in 696
training programmes with an external cost of only $220,000
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Case Study 5:
Learning Initiatives in Kenya
In Kenya, partner BDS organisations arranged enterprise visits for SMMEs to
promote learning, the exchange of information and to develop commercial
linkages






The sub-sector that would be the focus of the programme was selected and assessed its
main needs
Participating entrepreneurs were selected, taking care to ensure that they did not include
direct competitors to facilitate the free exchange of information
The participants were introduced to the programme's objectives and assisted in setting
personal goals and formulating a work plan for the exchange visit and later activities
Visits were mostly in groups.
Follow up one-to-one advisory services on product design, development and skills upgrading
were provided
Further learning was facilitated by later joint workshops with the entrepreneurs, which also
helped to assess impact.
Enterprise visits have had some success in terms of new practices and skills
acquired by the enterprises. Direct costs of the visits were covered by the
SMMEs
27
Case Study 6:
Information Services in Benin
This project initiated three approaches aimed at promoting access by SMMEs
to useful information
1. Question-and-answer service
2. User-Led Innovation (ULI)
 Existing networks were used to provide a question-andanswer service
 The facilitation of opportunities for SMMEs to discuss
product design, quality and price with their customers in a
neutral setting
 Results show a substantial impact on the product range
and revenues of participating SMMEs
 A group of 9 metalworkers developed 7 new
products, and improved 2 existing designs.
Generating additional sales worth $4,500 over the
following six months
 8 participating SMMEs developed 11 new products,
generating additional sales worth $8,200 over the
following year
 One SMME increased its sales by 180%
 The SMME pays $2 for each question submitted, and
pays for the answer at a rate of five times the cost of the
photocopying required
 It is hoped that scaling up the service will lead to several
SMMEs asking the same questions. Costs will thus
stabilise, while revenue will continue to increase
 127 questions were generated in 6 months
 This initiative has generated revenue that has covered 30
per cent of the costs of answering the questions
3. Street hawker initiative
 The sale of information to SMMEs through street hawkers
 Information booklets were sold for $1.70 (includes a 100 % mark-up on the production cost)
 Not a very successful initiative, as very few booklets were sold
28
Contents
1. Executive summary
2. Introduction
3. International best practice
4. Current BDS in South Africa
5. Strategic Options for BDS for Microfinanciers
6. Next steps
29
Summary: Current BDS in SA
Current BDS initiatives in South Africa
 Numerous delivery mechanisms are used e.g. internet, face-to-face, call centre
 Information is provided at various levels of detail e.g. general, industry-specific
 Support is provided at various levels e.g. information, advice, training, shared
services
 Revenue models range from donor-funded (free services) to self-sustained (charge
for services)
Areas for improvement
 Improved communication and cohesion between various industry players will reduce
duplication of effort
 Improved management and performance measurement of BDS providers is required
 Electronic media should be further leveraged for improved delivery of information
30
Approach
A number of providers of BDS in SA were identified and interviewed to obtain
insight into the effectiveness and reach of current initiatives
Identify key
stakeholders

Review
existing BDS
programmes
Conduct
interviews
Assess /
compare
BDS
programme
s
There are many providers of BDS to SMMEs in South Africa. A small sample was
selected for assessment, and include BDS providers who are:
 Donor-funded vs. private businesses
 Operating in isolated centres vs. those who have national reach
 Micro finance-specific vs. general business
31
SA BDS Consultation
Initiatives assessed, and organisations interviewed, include the following:
INITIATIVES ASSESSED
INTERVIEWEES
Ntsika Enterprise Promotion Agency
John Frances
Business Referral and Information Network (BRAIN)
Emilie Pretorius
Micro Enterprise Association (MEA)
Judy Blom
Mastermind Alliance
Willie Oosthuizen
The Business Place
Natalie Doctor
Business Beat
Volker Munster
LBSCs
 Centurion Business Support Centre
 Centre for Business Education and Training
 Sedibeng Training Centre
Phil van Rooyen
Barney Lehari
Mordecai Kocha
32
Consultation Questionnaire
Interviews with BDS stakeholders were held within the framework of the
questions below:
1.
Do you provide any support/training specifically to Microlending institutions?

Training courses, information feeds, others?
2.
If so, is the support run on a continuous basis, or is it driven through periodic programs?
3.
What have you found to be the most effective channel for providing information / running training
sessions?

4.
Can you provide some lessons learnt during previous programs run?

5.
7.
Successful programs, unsuccessful programs?
What is the revenue model for your organisation?

6.
In-person sessions, self-study courses (videos, CDs etc.), mentorship, web-based information
dissemination, paper-based material (newsletters etc.)?
Charging for training courses, corporate sponsorships, others?
Where are you located geographically?

Do you offer programs for clients who are located in rural areas?

Do you have any alliances offering services in rural areas?
Do you have any alliances with other companies / training institutions?
33
Overview of BDS Initiatives
An assessment of a sample set of SA BDS initiatives illustrated that excellent
progress has been made in supporting SMMEs

There are many BDS initiatives targeting SMMEs in general






Strengths:





Different delivery mechanisms are used
Different levels of information are provided
Different levels of support are provided
In some cases, shared services are provided
Both donor-funded and self-sustainable models are used
Large volumes of general business information are available
A large amount of support is available
A large network of service providers is in place across the country
A web-based BDS initiative is being successfully run
Lessons learnt:






Require sector-specific expertise and support
Face-to-face approach is very successful
Charging for services results in more buy-in and commitment from users
Closer interaction with affiliates required
Limited resources for industry research
Poor client satisfaction / client impact assessment processes
34
Rating of SA BDS Initiatives
A comparison of some SA initiatives illustrate a wide variety of capabilities and
reach
Internet
Delivery mechanisms
Nature of BDS support
Shared
services
Mastermind
Alliance
Support
services
Business Beat
Brain Affiliates / Ntsika LBSCs
Business Place
Ntsika
MEA
Info only
General
business
content
Relevance of
content to Micro
financiers
Mastermind
Alliance
Telephone
MEA
Brain Affiliates /
Ntsika LBSCs
Business Beat
Business Place
Khula
Brain
Brain
In-person
Single
location
Micro financespecific
content
Reach
There are very few BDS initiatives which specifically target micro
financiers
35
Ntsika
Khula
National
coverage
Enhancement of SA BDS initiatives
However, there are opportunities for improvement and consolidation of effort
Areas for improvement:
 Improved cohesion between various players – reduction of duplication
 Measurement of performance of BDS initiatives and players involved
 Electronic delivery of information
“Too many disparate
organisations offering similar
services”
“No all encompassing
infrastructure available for
BDS”
“Service providers should be
managed in a business-like
manner”
“A more integrated approach
is needed”
“Many initiatives are all
talk, no action”
“Initiatives are constrained
by logistics and time”
“There are a lot of BDS initiatives out
there, but none aimed specifically at
the Micro Lending Industry !”
“There are some problems
with the LBSCs”
“Not a lot of cooperation or
interaction between role
players”
Ref: Quotes obtained from interviewees
“It is very difficult to support the
rural areas”
36
Ntsika
All Ntsika initiatives are aimed at the development of SMMEs, with no
specific focus on the micro lending industry
NTSIKA
Target audience
 SMMEs across all sectors
Revenue model
 Ntsika is donor funded
 LBSCs are donor funded, or charge for services
Delivery mechanism
 Depends on programme, but generally in-person
Reach
 National network of 107 registered service providers (LBSCs) located throughout SA
Microlending focus
 None
Areas for improvement
 Poor management of LBSCs
 All are of different standard and capability, with some performing poorly
 Some LBSCs have a poor, unprofessional image in the community
 No official performance measurement of LBSCs by NTSIKA after accreditation
 NTSIKA does not require formal feedback from the LBSCs
37
Ntsika
All Ntsika initiatives are aimed at the development of SMMEs, with no
specific focus on the micro lending industry
NTSIKA
Offerings:
Local Business Service Centre (LBSC)
programme
 Non-financial support programmes to the small business sector via service providers
Training of Trainers Programme
 Enhancement of skills of SMME development trainers & information officers
Service Provider Organisational
Development
 Development of managerial skills of senior management and board members of SMMEs
Materials Development
 Development of specific training materials and tools
Joint programme with European Union
 Assistance to local SMMEs to compete in the international marketplace
Targeted assistance programme
 Development of enterprises owned & managed by disabled persons, youth & women
Technology Programmes
 Facilitate access to technology and appropriate skills transfer
Programme Design
 Assist Government and other key SMME development agents to design SMME related programmes and
strategies
Mentorship Programme
 Personalised counseling and advisory services offered by skilled business persons
Tender Advice Centre Programme
 Assistance to access tender contracts
38
Local Service Business Centres (LSBCs)
The LBSC’s are Ntsika’s primary vehicle for providing services to SMMEs
LBSCs
Offerings
 Each LBSC is unique in its capabilities and offerings
 Generally provide SMMEs with non financial support services such as:
 Training
 Advice and counselling
 Business Planning
 Information and tender advice
 Market Research
 Delivery of services through workshops, seminars, training programmes and mentoring
 Only LSBCs accredited through Ntsika form part of their national network of service providers
 Lack of information regarding the local economy
 Proceed on the basis of networking and contacts, which may poorly predict areas of growth
Target audience
 SMMEs across all sectors
Revenue model
 Donor funded, or charge for services
Delivery mechanism
 In-person, eMail, CDs, paper-based
Reach
 Distributed nationally
Microlending focus
 Limited / None
Areas for improvement
 Poor management of LBSCs
All are of different standard and capability, with some performing poorly
Some LBSCs have a poor, unprofessional image in the community
No official performance measurement of LBSCs by NTSIKA after accreditation
NTSIKA does not require formal feedback from the LBSCs
39
KHULA
KHULA is a DTI initiative launched in 1996 to facilitate the provision of loan
and equity capital to SMMEs via RFI intermediaries
KHULA
Offerings
 Main offering is the supply of finance to banks and RFIs for investment in SMMEs
 KHULA credit guarantee
 Regional equity funds
 KHULA Start programme
 Loans to RFIs
 Provides business mentoring
 THUSO Mentorship Programme
 e.g. assistance with pre-loan business plans, post-loan support
Target audience
 SMMEs across all sectors
Revenue model
 Donor funded
Delivery mechanism
 In-person support
Reach
 National coverage
Microlending focus
 Complete
Areas for improvement
 KHULA has poor image in the microlending industry
 KHULA officials are sometimes perceived to not be experts in the feed
 Mentorship programme perceived as weak
40
Business Referal and Information Network
(BRAIN)
BRAIN is a DTI initiative managed by NAMAC, and is mainly a web-based
portal of general business information
BRAIN
Offerings
 Provides information to SMMEs via a website, and via nationally-distributed affiliate members.
 Portal has 280 pages of general business information, and has 40 000 visitors per month
 Affiliate member network is nationally distributed
 ±300 existing business support centres
 Affiliates provide support to local surrounding community: training, mentorship etc.
 Affiliates are completely autonomous organisations
Target audience
 SMMEs across all sectors
Revenue model
 Brain is donor funded
 Affiliate members are donor funded, or charge for services
Delivery mechanism
 Call center, internet portal, national affiliate support structure
Reach
 National
Microlending focus
 Limited / None
Areas for improvement
 Poor management of affiliate members
All are of different standard and capability
No official performance measurement of affiliate members after accreditation
BRAIN does not require formal feedback from the affiliate members
 Affiliation with DTI perceived as weakening the image of BRAIN
 Research activities of BRAIN could be improved, but are constrained by lack of resources
 Lack of microlending information a weakness, as noted by BRAIN
41
Mastermind Alliance
Mastermind Alliance provides specific support to microfinanciers, and has a
comprehensive microfinancing manual
MASTERMIND ALLIANCE
Offerings
 Provide advice, training, information and consultative support to members
 Charge for services is covered by membership fee
 Distribute regular newsletter via email and regular post
 Have developed a comprehensive manual specifically targeted at micro financing – also available on CD
 Have regular regional management meetings in the provinces
 Currently developing an internet portal for microlending
Target audience
 Microfinanciers
Revenue model
 Membership fees
 Charge for providing training material/assistance to non-members on an ad-hoc basis
Delivery mechanism
 In-person, eMail, CDs, paper-based
 Currently developing a microlending internet portal
Reach
 National membership structure
 Based in Johannesburg
Microlending focus
 Complete
Areas for improvement
 Could improve cohesion with other industry players
42
MEA
The MEA provides SMME support services and aims to increase the
efficiency and effectiveness of micro enterprise development organisations
MEA
Offerings






Target audience
 Microfinanciers
Revenue Model
 Membership fee
Delivery mechanism
 Resource center responds to emails, telephone and fax requests
Reach
 National
Provide business development services, and financial support
Provide best practice research from a variety of sources (e.g. CGAP site etc.)
Ensure code of conduct is adhered to, and set industry standards
Provide advocacy on behalf of members
Provide regular newsletters
Research subscription service (available to members and non-members)
 Resource center located in Johannesburg
Microlending focus
 Complete
Areas for improvement
 Resource center could be improved
Material offered is limited / dated
Access is limited – no internet access, no call centre
Research capability is constrained by lack of resources
 Could improve cohesion with other industry players
43
MLA
The MLA was founded to help structure the industry and to help regulate
and lay down ethics and values to members in the industry
MLA
Offerings





Target audience
 Microfinanciers
Revenue model
 Membership fee
Delivery mechanism
 Resource center responds to emails, telephone and fax requests
Reach
 National membership
Microlending focus
 Complete
Areas for improvement
 Provision of information to members could be improved
Focus of initiatives and programmes aimed at structuring the industry and promoting ethics and values
Start up advice offered to new micro financiers
Facilitate networking between members
Act as a mouthpiece for members within the role playing spectrum of the industry
Publish circulars and newsletters
 Could improve cohesion with other industry players
44
The Business Place
The Business Place is an Investec project aimed at providing free advice
and councelling to entrepreneurs
The Business Place
Offerings
 Target people who want to start / grow their own businesses
 Housed in a building in Johannesburg (partly sponsored by Investec :
 Contains a library / resource centre, and provides access to business networks
 A number of SMME businesses are located in the building (business incubator basis), and provide
services to those using the centre
 Provide basic business training, company registrations, access to finance, computer training, marketing
assistance, business ideas and products, legal advice, network of community organisations
 Consultations and advice are generally free
 Free professional and legal advice is provided by volunteer organisations
Target audience
 Entrepreneurs / SMMEs across all sectors, Johannesburg region only
Revenu model
 Donor funded
 Sponsored by Investec
Delivery mechanism
 In-person
Reach
 Johannesburg
Microlending focus
 None
Areas for improvement
 Reach limited to Johannesburg area only
 Resource centre very small
 No focus on microfinanciers
 Could improve cohesion with other industry players
45
Business Beat
Business Beat is a Deloitte & Touche empowerment initiative designed to
enhance investment in emerging black entrepreneurs and SMMEs
Business Beat
Offerings
 Supports corporates, franchisors and public sector organisations that are investing in black
empowerment and entrepreneurial development
 Supports the identification and matching of emerging entrepreneurs with viable business opportunities
 Provides a comprehensive programme focused on:
 Selecting potential entrepreneurs
 Development of business skills
 Mentoring: development and business skills transfer
 Entrepreneurial support
 Access to specialist advice (e.g. IT and tax)
 Charge entrepreneur for services (with some subsidies / sponsorship provided if viable)
 Retracts from the support process after entrepreneur has become established
Target audience
 Black empowerment and entrepreneurial candidates
 Candidates undergo screening process prior to assistance
Revenue model
 Charge for services
Delivery mechanism
 In-person
Reach
 National reach, although limited
Microlending focus
 None
Areas for improvement
 Improved reach to other provinces, and rural locations
 Could improve cohesion with other industry players
46
Contents
1. Executive summary
2. Introduction
3. International best practice
4. Current BDS in South Africa
5. Strategic Options for BDS for Microfinanciers
6. Next steps
47
Summary:
Strategy for Micro Financier BDS in SA
Best practice model for BDS delivery
 Central hub / resource centre coordinating all relevant information / support advice
 Collate material currently available in the market, and identify additional material needs
 Material to be very specific to micro finance, but also to contain general business material
 A single hub, centrally managed
 Call centre / internet access of resource centre
 Caters for both ‘hi-tech’ (internet) and ‘low-tech’ (telephone) users
 Both channels access similar hub of information
 Nationally distributed field of service providers for face-to-face support
 Ensures local expertise and content
 Caters for mentoring and coaching initiatives
 Caters for shared services
48
BDS Survey Results
The survey of micro financiers revealed that telephone advice and advice
centres are the most popular methods of delivering support
Future BDS initiatives
BDS Delivery Mechanisms
The top priorities and requirements for
future business development support
initiatives are:
%
The most popular methods of delivering
business development support are
through:
%
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
78
74
74
74
57
51
43
43
39
31
8
1.
2.
3.
4.
5.
6.
7.
8.
28
25
23
17
13
11
1
0
Marketing / Industry information
Business process improvements
Business planning
Business Analysis
Management Reporting
Financial / Accounting
Administration
HR / Staff Planning
Internal Auditing
Network / Referrals
Technology assistance
Telephonic advice
Advice Centres
Classroom Training
On-the-job
Seminars
Training via email
Mentoring
Training via the internet
The BDS strategic recommendation takes into account the micro
financiers’ preferred delivery mechanisms
49
BDS Delivery Media
Highest priority should be given to those BDS delivery media which can be
accessed by the majority of the target audience
Large
Telephone
Radio
SIZE OF TARGET AUDIENCE
Newsletters
Large no. of users
accessed, with low
implementation effort
TV
Videos
CDs
Internet
eMail
One-on-one’s
Mentoring
Roadshows
Small
Low
EASE OF DELIVERY
High
• Cost to design, develop and implement
• Time to design, develop and implement
50
BDS Delivery Media
A combination of an internet portal and a telephone call centre will provide upto-date information to practically the entire target audience, reaching both urban
and rural users
Internet






Telephone
 Information delivery managed by a telephone call centre
 Call centre operators access info via internet portal described above
Radio
 Periodic delivery of training / advice
 Targeting of community radio stations most effective
 Expensive, especially for prime-time slots
Newsletters
 Material may be dated by time of publication
 Cannot make last-minute changes
TV
 Periodic delivery of training / advice
 Very expensive, especially for prime-time slots
Videos
 Material may be dated by time of publication
CDs
 Material may be dated by time of publication
Telephone
Radio
Newsletters
TV
Videos
CDs
Internet
eMail
Daily updates to posted material possible
Latest, up-to-date material available
24 hour access
Managed from one location
No physical delivery issues
Only accessible by “high-tech” users
However, best practice research indicates that there will always be a need
for mentoring and face-to-face provision of information and support
51
BDS Delivery Solution
Supporting the internet/call center portal with an ‘on-the-ground’ service
provider network will ensure that the needs of the entire target audience are
catered for
BUSINESS DEVELOPMENT SUPPORT
BASIC INFORMATION AND ADVICE
SPECIFIC INFORMATION AND SUPPORT
Call centre
Internet Portal
MICRO FINANCIERS
Variety of information
sources, catalogues and
library items
BDS RESOURCE CENTRE
52
SERVICE PROVIDER (SP) NETWORK
BDS Delivery Solution
The revenue model supporting the BDS delivery solution is dependent on the
types of services and information it will eventually provide
e.g. Training manuals
e.g. Best practice
analysis
Research
e.g. Outsourcing of
payroll function
Shared
services
Information
SOURCES
OF
REVENUE
Accreditation
of SPs
Services e.g. Internal audits
Access to
portal
e.g. Access to restricted
information
e.g. SPs pay for accredited status
/ franchising of SPs
A business case must be developed and agreed to ascertain the full
financial benefits of setting up the BDS initiave
53
Options for BDS Delivery Solution
The BDS model can either be implemented as an end-to-end solution, or the
various components can be implemented independently
OPTION 1
OPTION 2
OPTION 3
BDS resource centre only
Service provider network only
BDS resource centre
and SP network
Advantages
 Easy to develop and manage
 Supports MFs who have minimal
technical capability (telephone is
minimum requirement)
 24 x 7 availability
 Few players involved, therefore low
political impact
 Latest, up-to-date information
 Relatively cheap
 Supports MFs who have minimal / no
technical capability
 Contributes to development of local
SMMEs, and of the community
 SPs provide sector / community specific
research
 Caters to full spectrum of MFs (low –
hi tech)
 Continous feedback loop re. support,
training and services needs
 SPs provide sector / community
specific research
 BDS resource centre supports SPs
 Contributes to development of local
SMMEs, and of the community
 24 x 7 availability
Disadvantages
 No network of SPs for walk-in clients
(rural areas)
 No community or sector-specific
information is easily accessible





 Many political players involved
 Governance structure may be
complicated
 Selection and management of SPs
may be complicated
Recommendation
Selection of credible SPs may be difficult
Information and skills may be dated
No central information support for SPs
Complicated management of SPs
8 – 5 availability



A full implementation is recommended to ensure efficient support for
the MFs and the SPs, and for superior information provision
54
Role of the BDS Centre
The BDS centre will be a hub for all information relating to the micro financing
industry, and will coordinate activities between the micro financiers and the
service providers
INFORMATION
Phone /
fax
CALL
CENTRE
INTERNET
PORTAL
Online
access
MF-specific
information *
Library of
books, CDs,
videos
General
business
information
Training
Catalogues
ACTIVITIES
Portal maintenance
Accreditation of SPs
Monitoring of SPs
Client database
Research
Access to
electronic
databases
Links to intl.
contacts
Coordinate events / training
Coordinate client feedback
Online
chatrooms
Newsletters
Marketing
Social responsibility
FRONT-office
BACK-office
BDS Center
MF = Micro financier
* Best practice
55
Roleplayers: BDS Centre
Currently in SA, no organisation offers the full range of capabilities required to
run the proposed BDS centre, although a number of players play in different
areas
CALL CENTRE /
INTERNET PORTAL
BRAIN
 Call centre
 Internet portal
 Both managed and maintained by BRAIN
INFORMATION
Local resources: e.g. MFRC, MEA,
MLA
 Micro financier-specific information
 Not available online
International resources: e.g. CGAP,
ILO, etc.
 Online source of micro financier-specific
information
BRAIN
 Online databases
 Links to general business information (280 links)
 No micro financier-specific information
BANKSETA
 Micro financier training curriculum and material
Willie Oosthuizen (Mastermind
Alliance)
 Micro finance Manual - book and CD
 Currently designing an internet portal
Ebony Consulting etc.
 Micro financier training curriculum and material
PROVIDERS
56
Role of the Service Providers
The SPs should be sustainable businesses, and will be accredited and
monitored by the BDS center
SERVICES
ACTIVITIES
Business
linkages
Conduct
training
Provide feedback to BDS*
Market within community
BDS
Referrals
Mentoring /
counselling
Workshops
Leverage BDS information
Manage events programs
Walk-in
clients
Office based in
city or town,
across SA*
Provide
services
(charge / free)*
Communityspecific market
research*
Business
incubator
Shared
services
(e.g. payroll)
Manage training programs
Assess client needs*
Conduct local research*
Affiliated Service Provider
 Accreditation to be based on various criteria e.g. service offered, service delivery track record /
credibility, cost of delivery, geographical reach, etc.
 “Accredited status” to be reviewed annually, or as required
* Best practice
57
Roleplayers: Service Providers
There are many service providers located around South Africa, providing a
diverse range of services
SERVICE
PROVIDERS
Local Business Service Centres (LBSCs)
 Accredited by Ntsika
 Diverse range of operations, services and size of
organisations
 Minimal reporting responsibility to Ntsika
 Many have poor reputation in marketplace
BRAIN affiliate members
 Accredited by BRAIN
 Main accreditation criteria are:
– Must have internet capability
– Must have existing client base
 No rigorous monitoring by BRAIN
 No reporting responsibility to BRAIN
Business Beat service providers
 Managed by a formal reporting process
Many other examples exist: The Business Place, Mastermind Alliance, Ebony Consulting etc.
To ensure credibility and sustainability, very specific accreditaion criteria
must be enforced on the SPs providing services to microfinanciers
58
Role of the Micro Financier
The MFs will experience a ‘pull’ and ‘push’ of information from the various
resources
BDS Centre
Local SP
Receive newsletters
via email / post
Receive in-person
training
Receive information
via email / post
Internet
Internet
Receive incentives
Receive specific
local research
Phone
Conduct online
training / research
Browse portal for
updates
Chat online
Provide feedback*
Receive shared
services
Walk-in
Receive incentives
Go on site visits
Fax
Many different incentive
schemes exist to encourage MFs
to use all the resources available
Micro financiers – Urban and Rural
MF = Micro financier
* Best practice
59
‘Walk-in’ for
assistance
Challenges to Implementing BDS Model
Comprehensive design of processes and of roles and responsibilities is
required to ensure efficient operation of the BDS initiative
Challenges
Actions
Resource centre employees must be
adequately skilled
 Recruit call centre operators with micro finance
industry experience
Defining a satisfactory business case for the
BDS model
 Identify the revenue model, sources of income and
sources of costs of the initiative
Existing information must be taken into account  Identify and assess existing information
 Identify gaps in existing information
Micro financiers must be adequately
incentivised to utilise the portal
 Interview micro financiers to assess most suitable form
of incentivisation
Service providers and affiliates must be credible  Define and communicate management and
accreditation of affiliates processes
and trusted in the community
Agreement has to be reached between all the
involved parties prior to development of a
support centre and network
 Issues to be resolved include:
 Who will sponsor the project?
 Who will finance the project?
 Who will be accountable for the project?
 Who will manage the various components of the
BDS solution?
60
Approach to Tiered Rollout
PHASE 1
Preproject
decisions
Establish BDS
resource centre
???
4 months
PHASE 2
Establish
PHASE 3
Establish
PHASE 4
Establish
1st tier
2nd tier
3rd tier
Service
Providers
Service
Providers
Service
Providers
3 months
3 months
3 months
Phases 1 and 2 could be conducted in parallel
Pietersburg
Nelspruit
Pretoria
KEY
Johannesburg
BDS Resource Centre
1st Tier SPs
Upington
Bloemfontein
Durban
2nd Tier SPs
3rd Tier SPs
East London
Beaufort West
Cape Town
Port Elizabeth
61
Approach to Tiered Rollout
Within each phase, an integrated approach should be adopted to ensure
optimal benefit of the BDS solution
Illustrative
PHASE 1
DESIGN
DEVELOPMENT
IMPLEMENTATION
PROTOTYPE
High level
solution design
PILOT
ROLL OUT
Mobilisation
Early Experiments
Experiments
Early Implementation
Implementation
Early,
Focused
Investigation
Focused
Investigation
Experiments
Implementation
Focused
Investigation
Detailed Design
Implementation
62
Approach to Tiered Rollout
Iterations of the ‘experiment, implement and investigate’ approach will result in
continuous improvements in the design and implementation of the solution
Key Activities
Involved Parties
Experiments
 Test concepts and ideas, e.g.
 Selection of information
 Training curriculum
 Portal design
 Call centre design
 Involvement of market players etc.
 Project team
 Working group (Consultative Design Team)
 Working group of industry players
 Include micro financiers, current providers
of BDS, service providers, internet solution
designers
Implementation
 Test implementation concepts, e.g.
 Accessibility of call centre
 Activation of portal
 Accessibiltiy of portal
 Communication to users
 Training of users
 Project team
 Implentation group
 Sample group of micro financiers
Investigation
 Investigate success of experiments
 Make improvements to design or approach
if necessary
 Recommendations for additional
experiments
 Project team
 Working group
 Implementation group
63
Approach to Tiered Rollout: Phase 1
Establish BDS
resource centre
Establish
Establish
Establish
1st tier
2nd tier
3rd tier
Service
Providers
Service
Providers
Service
Providers
ESTABLISH BDS RESOURCE CENTRE
KEY ACTIVITIES
 Obtain buy-in and sponsorship in the market
 Identify and collate key sources of information
 Design and develop internet portal – people, processes and technology
 Design and implement call center – people, processes and technology
 Design a performance measurement system
 Communication and marketing activities
 Training on use of the portal
 Prototype and test on select group of micro financiers – update design if
necessary
KEY OUTCOMES
 Information store containing relevant information
 Internet portal providing 24 hour access to information store
 Call center operation providing 8 – 5 access to information store
TIME REQUIRED
 4 months
NOTE: activities and requirements to be confirmed during detailed programme design
64
Approach to Tiered Rollout: Phase 2
Establish BDS
resource centre
Establish
1st tier
Service
Providers
Establish
Establish
2nd tier
3rd tier
Service
Providers
Service
Providers
ESTABLISH 1st TIER SERVICE PROVIDERS
KEY ACTIVITIES
 Design operational model for SP / BDS - people, process, technology
 Design implementation approach
 Define accreditation criteria for SPs
 Audit and select 1st tier SPs
 Conduct prototype with small group of micro financiers and SPs – revisit
operational model design if required
 Conduct pilot – revisit implementation approach if required
 Roll-out to 1st tier SPs
KEY OUTCOMES
 Tier 1 SP operating model
 Network of SPs in major locations
TIME REQUIRED
 3 months
NOTE: activities and requirements to be confirmed during detailed programme design
65
Approach to Tiered Rollout: Phase 3
Establish BDS
resource centre
Establish
1st tier
Service
Providers
Establish
2nd tier
Service
Providers
Establish
3rd tier
Service
Providers
ESTABLISH 2nd TIER SERVICE PROVIDERS
KEY ACTIVITIES
 Revisit Tier 1 operational model and tailor for 2nd tier SPs
 Revisit implementation approach and tailor if necessary
 Revisit accreditation criteria for SPs and tailor if necessary
 Audit and select 2nd tier SPs
 Conduct prototype with small group of micro financiers and SPs – revisit
operational model design if required
 Conduct pilot – revisit implementation approach if required
 Roll-out to 2nd tier SPs
KEY OUTCOMES
 Tier 2 SP operating model
 Network of SPs in seconday cities
TIME REQUIRED
 3 months
NOTE: activities and requirements to be confirmed during detailed programme design
66
Approach to Tiered Rollout: Phase 4
Establish BDS
resource centre
Establish
1st tier
Service
Providers
Establish
2nd tier
Service
Providers
Establish
3rd tier
Service
Providers
ESTABLISH 3rd TIER SERVICE PROVIDERS
KEY ACTIVITIES
 Revisit Tier 1 and Tier 2 operational model and tailor for 3rd tier SPs
 Revisit implementation approach and tailor if necessary
 Revisit accreditation criteria for SPs and tailor if necessary
 Audit and select 3rd tier SPs
 Conduct prototype with small group of micro financiers and SPs – revisit
operational model design if required
 Conduct pilot – revisit implementation approach if required
 Roll-out to 3rd tier SPs
KEY OUTCOMES
 Tier 3 SP operating model
 Network of SPs in rural towns
TIME REQUIRED
 3 months
NOTE: activities and requirements to be confirmed during detailed programme design
67
Contents
1. Executive summary
2. Introduction
3. International best practice
4. Current BDS in South Africa
5. Strategic Options for BDS for Microfinanciers
6. Next steps
68
Next Steps
Decisions whether to pursue the BDS solution will have to be made by BANKSETA Micro
Finance Skills Project Steering Committee




Decide whether to pursue an end-to-end BDS solution
 Define business case for BDS solution
Make the “pre-project decisions”
 Who will be the sponsor of the project?
 Who will finance the project?
 Who will be accountable for the project?
 Who will be the involved parties in the BDS solution?
 Who will manage the various components of the BDS solution?
 Will current infrastructure be utilised, or will new infrastructure be
developed?
Existing information and providers must be identified and assessed
Launch project
69
Appendices
70
Appendix 1:
Key Activities - BDS Design and Evaluation
BDS market
assessment
 Gain an understanding of
existing markets
 Identify weaknesses /
opportunities
 Understand the reasons
behind the lack of demand
for, or supply of, services
 Identify local mechanisms of
service delivery and payment
 Choose the intervention
strategy and instrument
 Identify local institutions and
networks to build upon
Demand-side vs.
supply-side
interventions
Delivery and payment
mechanisms
 Flexible and innovative
approaches to delivery and
payment mechanisms are
needed to boost demand for
services
 Indirect payment mechanisms
for BDS are preferred (e.g.
commissions, mark-ups)
rather than direct fees:
– Can reduce the cash
flow burden on SPs
– Allows SPs to share
the risk that benefits
from BDS will not
occur
– Reduces admin costs
for SPs
 Demand-side: includes
information to raise MF
awareness of the benefits of
BDS, an incentives to utilise
BDS (e.g. vouchers)
 Supply-side: includes
introducing new models of
doing business and
developing new products and
services, as well as technical
assistance, training and other
capacity-building for BDS
providers
 Determine a baseline for
measuring progress in
market development
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Subsidies
 Long-term donor subsidies
are likely to distort BDS
markets and crowd out the
commercial provision of
services
 Subsidies may be justified in
the short term as an
investment in the
development of BDS markets
 However, even temporary
subsidies can create
distortions, and are justified
only if their market
development impacts
outweigh their distortionary
effects
 Donors must exercise care
in the application and
duration of subsidies
Appendix 1:
Key Activities - BDS Design and Evaluation
Focus on technical
assistance &
incentives
 Encourages competitive
performance of new and
existing BDS providers,
innovations, and the
development of appropriate
service products
 These types of interventions
often require relatively less
financial assistance
Selecting partner
institutions
Role of BDS facilitation
 Implement publicly
subsidised short-term
programs that should exit
once the market for a certain
business development service
has developed
 BDS must be professionally
delivered
 Partners must be demand-led,
entrepreneurial, and be
commercial market players
 Some facilitation services
(e.g., franchising, training-oftrainers) may eventually be
viable on a commercial basis,
and there may be scope to
spin these off or stimulate
local providers of these
services
 Partners should focus on
providing superior core
services, rather than
diversifying too broadly
 Partners should develop
transactional relationships
with SE clients based on
payment rather than charity
 Partners should develop a
sound understanding of their
clients’ needs as part of
their business strategy
72
Performance
measurement and
assessment
 Provides a basis for
institutions to improve their
services to clients
 Facilitates decisions by
donors on types of
interventions to improve the
extent and quality of the
market